Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2018

Fair value, assets measured on recurring basis

The following tables present information on the assets and liabilities measured and recorded at fair value on a recurring basis as of the dates indicated:



	Fair Value Measurements as of
	June 30, 2018
Measured on a Recurring Basis	Total		Level 1		Level 2		Level 3
	(In thousands)
Securities available‑for‑sale:
Residential MBS and CMOs:
Agency MBS	$	263,588	$	—	$	263,588	$	—
Agency CMOs	554,891		—		554,891		—
Private label CMOs	102,236		—		88,485		13,751
Municipal securities	1,412,092		—		1,412,092		—
Agency commercial MBS	1,097,216		—		1,097,216		—
U.S. Treasury securities	262,341		262,341		—		—
SBA securities	77,351		—		77,351		—
Asset-backed securities	69,781		—		36,948		32,833
Corporate debt securities	18,292		—		18,292		—
Total securities available-for-sale	3,857,788		262,341		3,548,863		46,584
Equity warrants	5,168		—		—		5,168
Other derivative assets	2,814		—		2,814		—
Equity investments with readily determinable fair values	4,569		4,569		—		—
Total recurring assets	$	3,870,339	$	266,910	$	3,551,677	$	51,752
Derivative liabilities	$	362	$	—	$	362	$	—



	Fair Value Measurements as of
	December 31, 2017
Measured on a Recurring Basis	Total		Level 1		Level 2		Level 3
	(In thousands)
Securities available‑for‑sale:
Residential MBS and CMOs:
Agency MBS	$	246,274	$	—	$	246,274	$	—
Agency CMOs	275,709		—		275,709		—
Private label CMOs	125,987		—		103,113		22,874
Municipal securities	1,680,068		—		1,680,068		—
Agency commercial MBS	1,163,969		—		1,163,969		—
SBA securities	160,334		—		160,334		—
Asset-backed securities	88,710		—		46,601		42,109
Corporate debt securities	19,295		—		19,295		—
Collateralized loan obligations	7,015		—		7,015		—
Equity investments ⁽¹⁾	7,070		5,922		1,148		—
Total securities available-for-sale	3,774,431		5,922		3,703,526		64,983
Equity warrants	5,161		—		—		5,161
Other derivative assets	1,873		—		1,873		—
Total recurring assets	$	3,781,465	$	5,922	$	3,705,399	$	70,144
Derivative liabilities	$	1,379	$	—	$	1,379	$	—

____________________________

(1) In connection with our adoption of ASU 2016-01 and ASU 2018-03 on January 1, 2018, we reclassified $7.1 million of equity investments from securities available-for-sale to other assets in the first quarter of 2018. The reclassification was applied prospectively without prior period amounts being restated.

Fair value, assets and liabilities measured on nonrecurring basis, valuation techniques

The following table presents information about quantitative inputs and assumptions used to determine the fair values provided by our third party pricing service for our Level 3 private label CMOs and asset-backed securities available-for-sale measured at fair value on a recurring basis as of the date indicated:



	June 30, 2018
	Private Label CMOs		Asset-Backed Securities
		Weighted		Weighted
	Range	Average	Range	Average
Unobservable Inputs	of Inputs	Input	of Inputs	Input
Voluntary annual prepayment speeds	4.9% - 48.1%	9.5%	5% - 15%	14.1%
Annual default rates	0.1% - 9%	2.4%	1% - 2%	1.9%
Loss severity rates	9.7% - 118.8%	48.0%	10% - 60%	55.7%
Discount rates	2.1% - 10.8%	6.3%	3.2% - 4.3%	3.6%

Fair value, quantitative inputs and assumptions used to determine fair value

The following table presents information about quantitative inputs and assumptions used in the modified Black-Scholes option pricing model to determine the fair value for our Level 3 equity warrants measured at fair value on a recurring basis as of the date indicated:



	June 30, 2018
	Equity Warrants
	Weighted
	Average
Unobservable Inputs	Input
Volatility	16.5%
Risk-free interest rate	2.6%
Remaining life assumption (in years)	3.6

Fair value, assets measured on recurring basis, significant unobservable inputs (level 3) reconciliation

The following table summarizes activity for our Level 3 private label CMOs available-for-sale, asset-backed securities available-for-sale, and equity warrants measured at fair value on a recurring basis for the period indicated:



	Private			Asset-Backed			Equity
	Label CMOs			Securities			Warrants
	(In thousands)
Balance, December 31, 2017	$	22,874		$	42,109		$	5,161
Total included in earnings	376			(21		)	1,474
Total included in other comprehensive income	(272		)	(239		)	—
Issuances	—			—			326
Sales	—			—			(1,745		)
Net settlements	(9,227		)	(9,016		)	—
Transfers to Level 1	—			—			(48		)
Balance, June 30, 2018	$	13,751		$	32,833		$	5,168

Assets carried at fair value on a nonrecurring basis

The following tables present assets measured at fair value on a non‑recurring basis as of the dates indicated:



	Fair Value Measurement as of
	June 30, 2018
Measured on a Non‑Recurring Basis	Total		Level 1		Level 2		Level 3
	(In thousands)
Impaired loans	$	76,321	$	—	$	15,862	$	60,459
OREO	953		—		953		—
Total non-recurring	$	77,274	$	—	$	16,815	$	60,459



	Fair Value Measurement as of
	December 31, 2017
Measured on a Non‑Recurring Basis	Total		Level 1		Level 2		Level 3
	(In thousands)
Impaired Non‑PCI loans	$	61,095	$	—	$	5,143	$	55,952
Loans held for sale	483,563		—		483,563		—
Total non-recurring	$	544,658	$	—	$	488,706	$	55,952

Net losses (gains) on nonrecurring assets

The following table presents losses recognized on assets measured on a nonrecurring basis for the periods indicated:



	Three Months Ended				Six Months Ended
Losses on Assets	June 30,				June 30,
Measured on a Non‑Recurring Basis	2018		2017		2018		2017
	(In thousands)
Impaired loans ⁽¹⁾	$	12,076	$	9,435	$	15,994	$	17,250
Loans held for sale	—		7,198		—		7,198
OREO	—		14		65		14
Total losses	$	12,076	$	16,647	$	16,059	$	24,462

__________________________


(1)	Loss for 2018 period relates to total loans. Loss for 2017 period relates to Non-PCI loans.

Fair value inputs, assets, quantitative information

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a nonrecurring basis as of the date indicated:

June 30, 2018

Valuation

Unobservable

Weighted

Asset

Fair Value

Technique

Inputs

Range

Average

(In thousands)

Impaired loans

19,980

Discounted cash flows

Discount rates

3.75% - 7.75%

6.82%

Impaired loans

27,282

Market approach

Adjustments for age and type of collateral

Impaired loans

8,927

Enterprise valuation with revenue multiple

Illiquidity discount

20%

Impaired loans

4,270

Third party appraisals

No discounts

Total non-recurring Level 3

60,459

Fair value, by balance sheet grouping

The following tables present carrying amounts and estimated fair values of certain financial instruments as of the dates indicated:



	June 30, 2018
	Carrying		Estimated Fair Value
	Amount		Total		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets:
Cash and due from banks	$	245,998	$	245,998	$	245,998	$	—	$	—
Interest‑earning deposits in financial institutions	205,567		205,567		205,567		—		—
Securities available‑for‑sale	3,857,788		3,857,788		262,341		3,548,863		46,584
Investment in FHLB stock	26,271		26,271		—		26,271		—
Loans and leases held for investment, net	16,753,053		16,438,905		—		15,862		16,423,043
Equity warrants	5,168		5,168		—		—		5,168
Other derivative assets	2,814		2,814		—		2,814		—
Equity investments with readily determinable fair values	4,569		4,569		4,569		—		—

Financial Liabilities:
Core deposits	15,586,238		15,586,238		—		15,586,238		—
Non-core non-maturity deposits	607,388		607,388		—		607,388		—
Time deposits	1,735,566		1,724,232		—		1,724,232		—
Borrowings	1,187,226		1,187,168		1,186,000		1,168		—
Subordinated debentures	451,878		435,641		—		435,641		—
Derivative liabilities	362		362		—		362		—



	December 31, 2017
	Carrying		Estimated Fair Value
	Amount		Total		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets:
Cash and due from banks	$	233,215	$	233,215	$	233,215	$	—	$	—
Interest‑earning deposits in financial institutions	165,222		165,222		165,222		—		—
Securities available‑for‑sale	3,774,431		3,774,431		5,922		3,703,526		64,983
Investment in FHLB stock	20,790		20,790		—		20,790		—
Loans held for sale	481,100		483,563		—		483,563		—
Loans and leases held for investment, net	16,833,287		17,023,098		—		5,143		17,017,955
Equity warrants	5,161		5,161		—		—		5,161
Other derivative assets	1,873		1,873		—		1,873		—

Financial Liabilities:
Core deposits	15,937,012		15,937,012		—		15,937,012		—
Non-core non-maturity deposits	863,202		863,202		—		863,202		—
Time deposits	2,065,322		2,055,104		—		2,055,104		—
Borrowings	467,342		467,342		467,000		342		—
Subordinated debentures	462,437		444,383		—		444,383		—
Derivative liabilities	1,379		1,379		—		1,379		—